The relationship between wine producer, wholesale/distributor, and retail/customer
Notably, there exists a close relation between producers, wholesale distributors, retailers, and customers. The producers are responsible for large scale production and then sell to wholesale distributors who sell to retailers or direct to the clients (Brostrom et al.). The retail sector boasts of 70% of the market sales. The purpose of this paper is to link the relationship between the production of wine and consumption of the same using the following subheadings.
Retail outlets that consumers can obtain wine and the different markets they support.
Retail outlets are also known as off-premise outlets, and they are the pillars of wine manufacturing and distribution. These outlets differ differently according to size, consumer objectives, and the varieties available. There are several retail outlets where consumers can obtain wine easily and conveniently. Examples of such retail outlets include liquor stores, grocery stores, clubs and restaurants, and mass merchandisers.
Mass merchandisers such as supermarkets sell wine to people who want to buy other premium goods from the same store. Grocery stores sell limited variety wines and those of low price, but of premium quality, also, such wines are made using sustainable practices. Clubs and restaurants sell wine to those who value price for the quality. They sell a variety of wine selection and different categories such as low price wines and high price wines because they intend to sell to every wine consumer irrespective of their standards. Also, liquor stores specialize in selling wines to a certain group of wine consumers who prefer certain brands.
How retail outlets obtain their wine to sell for profit and what are roles and types of wholesalers.
Retail outlets obtain their wines from several sources. Some retail outlets obtain their wines from the manufacturer directly. They eliminate the brokers and the wholesalers who increase the price of wine products and decrease the profit margins (Bruwer et al., 47). Also, some retailers obtain their wines from the wholesalers or the distributors who get their wines from the manufacturers. In addition, there are other retailers who manufacture their own products in small quantities, which leads to them gaining maximum profits.
In many instances, the manufacturers sell their wine to distributors who then sell the wines to the retailers. The wholesaler has several roles in the distribution channels of wine such as,
- Reselling the wine in bulks
- Focusing only on how to store the wine and how the wine will be delivered to the retailers
- They fulfil the orders placed by the retailers.
- They build a good relationship with the manufactures and
- They are also involved in sales and marketing of the different varieties of wine.
Distributors are categorized into three groups which are,
Selective distributors – These distributors are based on selling their wine on specific retail outlets at particular locations (Szolnoki, and Dieter, 61). Such distributors specialize with specific types of wines, which in turn helps the manufacturers to customize the brands and prices.
Intensive distributors – These distributors sell their wine to different retailers in different locations. They don’t have specific areas; hence they penetrate a large market compared to other distributors.
Exclusive distributors – These distributors sell their wines to limited retailers. Luxury brands available to certain types of people, and particular stores exclusively characterize this type of distributor, and such distribution helps in maintaining the image of a wine brand.
How do wine producers allocate their production, and who are they supposed to sell their wine to.
Manufacturers or producers use different ways to allocate wine products to their wholesalers or distributors. Firstly, market demand that which brand and distributor needs the most is one primary factor that the producers consider a high percentage in their allocation (Hernández et al., 204). Secondly, they consider the upcoming markets and allocate a certain percentage of production. Also, the loyal distributors are considered by the producer during the allocation of the production.
Except in some cases where the law exhibits the direct sale of wine from producers to consumers, manufacturers can sell directly to retailers though it can be so engaging. Due to the high number of consumers and processes involved in delivering to the consumers, it can be difficult for the producers to sell their wine products directly to the consumers.
Online options for purchasing wine
The Internet has increasingly developed as a tool that producers use to sell their products to their clients following the laws and regulations (Noparumpa et al., 416).
Posting regularly on social media – When you consistently post to social media, after some time, there will be some customers who visit social media sites and purchase the wine products.
Cross marketing with nearby businesses – Producers, can market the businesses around them, which leads consumers of wine to get to know the wine products and hence purchasing the products over time.
Use of wine clubs – Producers can use wine clubs that offer membership and access to the products at a lower price, and also some surveys are conducted by the club members to design the preferences.
Use of online wine stores. Producers can develop online stores where consumers can order wine brands and the delivery done to the consumers. This can reach a variety of markets and expand profit margins.
In conclusion, there is a direct link between manufacturers, distributors, retailers, and consumers. The distributors play a major role in marketing, storing, and delivering wine products to retailers and consumers. The Internet as a tool for marketing and selling can be a very important way of reaching a wide market.
Works cited
Brostrom, Geralyn G., and Jack Brostrom. The Business of Wine: An Encyclopedia: An Encyclopedia. ABC-CLIO, 2008.
Bruwer, Johan, Isabelle Lesschaeve, and Benjamin L. Campbell. “Consumption dynamics and demographics of Canadian wine consumers: Retailing insights from the tasting room channel.” Journal of Retailing and Consumer Services 19.1 (2012): 45-58.
Hernández-Espallardo, Miguel, Manuel Sánchez-Pérez, and Cristina Segovia-López. “Exploitation-and exploration-based innovations: The role of knowledge in inter-firm relationships with distributors.” Technovation 31.5-6 (2011): 203-215.
Noparumpa, Tim, Burak Kazaz, and Scott Webster. “Wine futures and advance selling under quality uncertainty.” Manufacturing & service operations management 17.3 (2015): 411-426.
Szolnoki, Gergely, and Dieter Hoffmann. “Online, face-to-face and telephone surveys—Comparing different sampling methods in wine consumer research.” Wine Economics and Policy 2.2 (2013): 57-66.